Rental rates should not be the main contributing factor when buying a long-term investment property. Focusing too much on those rates can distort the property’s potential and severely limit your purchasing options.
To make a sound real estate investment decision, it’s important to take a holistic view of a potential property within the context of the current market.
Factors of a Profitable Rental
There are several critical factors involved in choosing the right real estate investment. Avoid short-term thinking and look beyond simply comparing the anticipated rental rate to your mortgage payment.
Industry experts say that there are as many as ten different things to consider when beginning your next property search. For example, the neighborhood in which the property is located, the local job market, and nearby amenities are all important elements to consider when choosing a rental property. The location of a property is important because it will determine what type of tenants you will be able to attract to the property and will greatly impact your vacancy rate. The local job market and proximity to amenities will also affect the type of tenants drawn to your rental, as well as impact your property values.
The value of the property, now and in the future, can be an invaluable piece of information when choosing a rental to buy. The house’s potential for appreciation must be one of the long-term factors considered when making your decision, because even if the property isn’t valued highly at the present, it may be five or ten years down the road. Another related consideration is future development in the area. New construction can have a significant impact on property values!
While assessing the market and local conditions are important, investors cannot afford to overlook things such as property taxes, the number of listings and vacancies in the area, and average rents. A detailed market analysis can provide rental property owners with a window into the near future and, when combined with the other information gathered, provide a solid base upon which to estimate future performance.
Want some help with your investment? APG Properties assists residential real estate investors through a range of quality services, applying industry best practices to ensure that each property you buy will help you meet your long-term financial goals. Give us a call!